My clients are often
concerned about keeping their car if they file for bankruptcy. Whether you will be able to keep your car in
bankruptcy depends on several factors.
First, how much equity do you have in your vehicle? In Georgia, a chapter 7 filer has a variety
of exemptions available to him. These
exemptions are used to determine what property the filer can keep and what
property must be handed over to the bankruptcy trustee for the benefit of the
creditors. Georgia allows a $3,500
exemption for equity in one’s vehicle (or vehicles). A married couple filing jointly will each
have the $3,500 exemption available to him or her.
This means if your car is paid off, and the
value is $3,500 or less, you will be able to keep your car. If you are still making
payments on your car, and the value of the car is no more than $3,500 greater
than your loan balance, you may be able to keep the car. Generally, if you are still making payments
on the car and have no more than $3,500 of equity in your car, in order to keep
the car, you will need to (1) be current on your payments when you file for
bankruptcy, and (2) have the necessary income to continue to make the payments
as they come due after the bankruptcy petition is filed. Often, if you are still making payments on
your car, your lender will require you to sign a reaffirmation agreement if you
want to keep the car. A reaffirmation
agreement ensures that your bankruptcy discharge has no effect on your
obligation to make payments for the vehicle.
If you have additional questions
about bankruptcy, please call Brim Law, LLC at (678) 353-3350 for a free
consultation.
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